Should Your Plants be Generalists or Specialists?

Are plants more productive and efficient when they are structured to concentrate on fewer products or value streams? Or are manufacturers better off structuring plants for maximum flexibility, with the capability of producing multiple products? This was the topic of a fascinating discussion this week among members of the Manufacturing Leadership Council's Operational Excellence discussion group. The consensus: While a more specialized approach brings certain challenges, it can deliver significant operational efficiencies, including lower costs and greater safety, quality, and customer service.

One executive at a major medical supplies manufacturer said his company has been pursuing what it calls a Focused Factory strategy for the past 4 years. The company carves out Focused Factories that are each dedicated to producing just one or two products or value streams. Although Focused Factories share some resources such as HR, each has its own dedicated staff, lead by a Focused Factory manager, process engineer, quality engineer, lead operator, buyer/planner, maintenance tech, and material coordinator. The optimal size for each Focused Factory is 100 FTEs, and up to 4 Focused Factories may be under the same roof.

The approach increases accountability, enhances Lean initiatives, and allows the people in the Focused Factory to become highly efficient experts in a fairly narrow range of activities, said the medical supply executive.

The result has been tens of millions of dollars worth of savings over the past two years in reduced scrap, packing, and maintenance costs and improved processes, quality, and OEE.

The downside: Occasional conflict among Focused Factories over shared resources and the need to increase staff training and recruitment investment to meet the need for more mini-plant managers. Those pursuing a Focused Factory strategy also may face product availability and continuity concerns from customers to the extent that the approach leads to single-source dependence on a single Focused Factory for a given product or subsystem.

What's been your experience with a Focused Factory approach? Do the rewards outweigh the risks?